Simon Palmer, December 2012
Sellers are known to be secretive and play their cards very close to their chests. Sure they want to sell their practice and make the most of the asset that they have created, however they also often have confidentiality concerns and an emotional component to the transaction that is overlooked by potential buyers. The more the buyer is able to empathise and get on the same wavelength as a seller, the more forthcoming and welcoming they will find that the seller becomes.
If you are interested in buying a dental practice, you would do well to try to start thinking like a seller when you are communicating with him/her. Where the buyer sees the walls, fit-out and equipment, the seller sees decades of hard work in the making. Where the buyer sees patients and staff, the seller sees a second family. And where the buyer sees turnover and EBIT, the seller often sees the intimate workings of his day-to-day life.
A key piece of advice that I would give any prospective purchaser of a dental practice before he starts looking is that practice purchase is usually as much about relationship building and courtship as it is the financials. Dont simply call a practice for sale and say you saw their ad and expect financials and information coming your way. Any business purchase and sale requires information exchange in order to get the relationship off on the right foot.
What do sellers want to know about a potential buyer?
Plenty!
1. They want to know who you are:
Introduce yourself, tell them your name and age, where and when you graduated and your work history.
Why? Two main reasons: Firstly, it’s polite and, secondly, they are sharing financial information with you and they will feel much more comfortable doing so if you let them know who you are.
2. They want to know that you are serious:
How do you do this? Tell them what it is about their practice that makes you interested in it, or what makes you feel that their practice practice would be good fit for you. Are you a member of the local community? Have you seen a lot of practices before? Have you owned practices or other businesses before? Have you got financing, a lawyer and an accountant organised? Giving the seller answers to these questions will help him realise that you are serious about the transaction and aren’t going to waste their time.
3. They want to know that you appreciate their practice:
There seems to be a school of thought out there that the way for a buyer to get the best results during a sale negotiation is to point out all the ways that the practice is lacking and needs re-investment.
My advice to dental practice buyers is to do the opposite and be as complimentary as possible about the practice. Practice owners are often very emotionally attached to their practices and don’t like talking to people who are trashing the fruits of their labour.
4. They want to know that you are discrete:
Usually a seller won’t have told all his staff and patients that he is selling, and he doesn’t want them to find out until the deal is almost done. Tell the seller that you appreciate that discretion is necessary with these transactions and ask him early on how best to contact him (time and numbers/email addresses) to ask questions, coordinate visiting the practice and transfer documents.
5. They want to know that you will take good care of their staff and patients:
A dentist’s staff and patients often represent a second family to them and they want to know that they are leaving them in good hands.
How do you show this? Ask them if they know if the staff will stay on. At an early point, tell them that you want to show the patients as much continuity as possible, and it will help them get used to a new dentist if the staff they know are the same.
Buying and selling a dental practice is always going to be a commercial decision, and the price paid is always going to be of supreme importance. However too many buyers talking to practices for sale focus too much on the numbers of the transaction and not nearly enough on the relationship with the seller. Buyers are in competition with each other for the best practices for sale. the winning offer may not necessarily be the one that offers the most money but the one that offers good money and is also in the eyes of the seller the best fit for the practice on a personal and professional level.
